Trump opens a dangerous new trade-war front

[Bloomberg]( Today’s Agenda - The trade wars enter a [new phase](, increasing the [risks to the U.S.]( - Trump’s Fed attacks are [ill-informed](, and the Fed will probably just [ignore him](. - Trump’s Putin coddling isn’t an impeachment rationale yet, but [it’s getting close](. - Drugmakers’ Trump-inspired pricing [promises are hollow](. Trade Wars: A New Front President Donald Trump hasn’t quite won the trade wars yet. Just a week ago, some were arguing his tariffs, and threats thereof, [had already made China blink](, suggesting the war was over before it had really begun. It turns out China wasn’t so much blinking as napping – not even bothering to negotiate with the U.S., [according to Trump adviser]( Larry Kudlow. So Trump has cranked the rhetoric up to 11, threatening to slap tariffs on all $500 billion-plus of Chinese imports and hinting at a new weapon: devaluing the dollar to boost American exports. The buck dipped yesterday after Trump first grumbled about China’s falling currency and how the Federal Reserve keeps strengthening the greenback by raising interest rates. That may have made Trump happy – but [he should be careful what he wishes for](, warns Robert Burgess. If investors take him too seriously, then they could dump U.S. assets in earnest. If that includes bonds, then borrowing costs would rise – one of the very things Trump has been complaining about. But Trump doesn’t think about the long term – [only immediate gratification](, writes Jonathan Bernstein. From this surface-level perspective, a weak currency is good because it helps your exporters. But that ignores the impact on your importers, consumers and massive debt load. Meanwhile, China and other targets of Trump’s trade ire are [making free-trade deals without the U.S.](, note Bloomberg’s editors. Japan and the European Union signed a new pact this week. Other Asian nations are working on a separate agreement. The more the U.S. isolates itself from the rest of the world, the greater the odds it will never win these wars. Fed Meddling Less than a day after the White House walked back Trump’s initial criticism of the Fed, saying he respected its independence, Trump took to Twitter this morning to [lay into it again](. The bond market shrugged off the first attack, but fell hard on the second, possibly afraid the Fed might step back and let inflation build. Brian Chappatta suggests the [first reaction was probably the smarter]( one. If anything, Trump has made the Fed more likely to protect its own independence by sticking to its rate-hiking plan. Trump’s attacks [betray a misunderstanding]( of how the economy, Fed and interest rates interact, writes Dan Moss – Trump can’t have low rates and strong growth at the same time, as he seems to want. Rates usually rise when the economy is stronger, and part of the Fed’s job is helping that process along to make sure inflation doesn’t get out of control. This is especially so when an already-strong economy gets an extra jolt of [deficit-fueled steroids]( such as the tax cuts Trump and the GOP passed last year, notes Ramesh Ponnuru. Bonus Fed reading: - If trade turmoil makes the Fed stand pat at its next meeting, then stocks might [take it as a negative signal](. – Komal Sri-Kumar Putin on the Ritz Because Trump has invited Vladimir Putin to visit the White House this fall – right before the midterm elections Putin’s agents are [allegedly trying to undermine]( – it’s fair to continue to discuss the implications of his capitulation to Putin in Helsinki earlier this week. Despite what some critics say, this was not “treason” in a legal sense. Cass Sunstein explores whether it is “perfidy” in the more-obscure sense of what some Founding Fathers thought might be an impeachable offense. Trump’s behavior also does not seem to be perfidious yet, Cass writes – though it is [certainly coming close](. And it is definitely confusing – even to Trump’s own Director of National Intelligence, Dan Coats, who was shocked yesterday when a member of the Fake News Media informed him of Putin’s White House invite. This is par for the course in Trump’s chaotic White House, Eli Lake writes, raising the question of [why any of them stick around](: “Coats said on Thursday that he would not advise the president to meet one-on-one with the Russian leader again. It’s a safe bet that this advice will be ignored.” Bonus Putin Reading: - Putin may have conquered Trump, but he’s [got some troubles at home](. – Leonid Bershidsky Beware Drugmakers Bearing Promises One unique feature of Trump’s presidency has been the spectacle of Corporate America massaging his ego by grandly announcing things they think he’ll want credit for – new plants, hiring, etc. The pharmaceutical industry is doing it too, responding to his frequent drug-pricing complaints by announcing they’ll go easy on prices for a while. But these promises tend to be empty, writes Max Nisen. The latest and most egregious example is Roche Holding AG, which today said it wouldn’t raise drug prices for the rest of the year – meaning not until its next regularly scheduled price hike is due to happen anyway. “[Truly heroic](,” Max writes. Chart Attack Gosh, why are private-equity stocks doing so poorly, wonder private-equity chieftains. Stephen Gandel has [the simple answer](: General Electric Co. still [has a cash-flow problem](, writes Brooke Sutherland: Maybe it’s time for investors to stop [selling off emerging market stocks](, suggests Nir Kaissar. Weekend Reading Yes, the European Commission took $5 billion from Google; but it gave it [an even bigger gift in GDPR](. – Alex Webb The future of the [asset-management business isn't as bleak]( as you think. – Mark Gilbert Tighter sulfur-emission standards around the world will [roil the coal market](. – David Fickling Israel’s new Jewish-state law is a [betrayal of its democratic principles](. – Hussein Ibish To see the future of many U.S. cities, [look at Chicago](. – Conor Sen The abortion pill could help women after [Roe v. Wade is overturned]( – though that’s no sure thing. – Faye Flam California slashed greenhouse-gas emissions while [keeping its economy booming](. – Nathaniel Bullard (from [his newsletter]() ICYMI Stocks are [still in a bull market](. The FBI has tape of Michael Cohen [talking to Trump about paying off]( a Playboy model. Kickers “Yellow Submarine” [turns 50](. Say goodbye to [the last Blockbuster](. ([h/t Barry Ritholtz’s newsletter]() A [video history of science fiction](. What really [scares the kids these days](? Does [meditation work](? Note: Please send VHS tapes, suggestions and kicker ideas to Mark Gongloff at mgongloff1@bloomberg.net. *** New subscribers can [sign up here](hash=54223001ca3ffcf40f2629c25acea67a). To view in your browser, [click here](. Like Bloomberg Opinion Today? Subscribe to [Bloomberg All Access]( and get much, much more. You'll receive our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close. [FOLLOW US [Facebook Share]]([Twitter Share]( SEND TO A FRIEND [Share with a friend] You received this message because you are subscribed to Bloomberg's Bloomberg Opinion Today newsletter. 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